NU Online News Service, Dec. 30, 2003, 5:52 p.m. EST – Actuaries are ringing in the new year with a new message: they are the “architects of financial security.”[@@]
Actuaries will be sounding that message globally, according to Barbara Lautzenheiser, president of the American Academy of Actuaries, Washington.
Lautzenheiser cites the work that academy volunteers have done on capital adequacy projects such as the C-3, Phase II and Variable Annuity Reserving projects.
The C-3 project addresses risk-based capital criteria for variable products that include fixed-rate guarantees.
In time, that framework may evolve to help give consumers more flexibility in product choices, Lautzenheiser says.
The framework should be such that consumers can buy exactly what they need to buy, Lautzenheiser adds.
Lautzenheiser insists that there is no reason why insurers cannot develop products that offer multiple benefits. She suggests that actuaries and regulators can increase flexibility by taking a principle-based approach to determining solvency and financial strength rather than a strictly formulaic approach.
The actuarial academy looked at a principle-based approach for several years, while it was working on a unified valuation system for regulators at the National Association of Insurance Commissioners, Kansas City, Mo. That approach relied more on “earning warning systems” and talks with management than on use of solvency formulas.